Showing papers by "Andrei Shleifer published in 1995"
Posted Content•
TL;DR: In this paper, the authors show that arbitrage is performed by a relatively small number of highly specialized investors who take large positions using other people's money, which has a number of interesting implications for security pricing.
Abstract: In traditional models, arbitrage in a given security is performed by a large number of diversified investors taking small positions against its mispricing. In reality, however, arbitrage is conducted by a relatively small number of highly specialized investors who take large positions using other people's money. Such professional arbitrage has a number of interesting implications for security pricing, including the possibility that arbitrage becomes ineffective in extreme circumstances, when prices diverge far from fundamental values. The model also suggests where anomalies in financial markets are likely to appear, and why arbitrage fails to eliminate them.
3,997 citations
TL;DR: This paper examined the relationship between urban characteristics in 1960 and urban growth between 1960 and 1990, and found that both types of growth are positively related to initial schooling, negatively associated with initial unemployment, and negatively related to the initial share of employment in manufacturing.
1,162 citations
Posted Content•
TL;DR: This article examined the hypothesis that the superior return to so-called value stocks is the result of expectational errors made by investors and found that a significant portion of the return difference between value and glamour stocks is attributable to earnings surprises that are systematically more positive for value stocks.
Abstract: This paper examines the hypothesis that the superior return to so-called value stocks is the result of expectational errors made by investors. We study stock price reactions around earnings announcements for value and glamour stocks over a 5 year period after portfolio formation. The announcement returns suggest that a significant portion of the return difference between value and glamour stocks is attributable to earnings surprises that are systematically more positive for value stocks. The evidence is inconsistent with a risk-based explanation for the return differential.
755 citations
Posted Content•
TL;DR: In this article, a survey of 452 Russian shops, most of which were privatized between 1992 and 1993, is used to measure the importance of alternative channels through which privatization promotes restructuring.
Abstract: We use a survey of 452 Russian shops, most of which were privatized between 1992 and 1993, to measure the importance of alternative channels through which privatization promotes restructuring. Restructuring is measured as capital renovation, change in suppliers, increase in hours that stores stay open, and layoffs. There is strong evidence that the presence of new owners and new managers raises the likelihood of restructuring. In contrast, there is no evidence that equity incentives of old managers promote restructuring. The evidence points to the critical role that new human capital plays in economic transformation.
437 citations
Posted Content•
TL;DR: This paper examined the relationship between urban characteristics in 1960 and urban growth (income and population) between 1960 and 1990 and found that income and population growth move together and both types of growth are positively related to initial schooling, negatively related with initial unemployment and negatively related to the share of employment initially in manufacturing.
Abstract: We examine the relationship between urban characteristics in 1960 and urban growth (income and population) between 1960 and 1990. Our major findings are that income and population growth move together and both types of growth are (1) positively related to initial schooling, (2) negatively related to initial unemployment and (3) negatively related to the share of employment initially in manufacturing. These results are qualitatively unchanged if we examine cities (a smaller political unit) or SMSAs (a larger 'economic' unit). We also find that racial composition and segregation are basically uncorrelated with urban growth across all cities, but that in communities with large nonwhite communities segregation is positively correlated with white population growth. Government expenditures (except for sanitation) are uncorrelated with urban growth. Government debt is positively correlated with later growth.
202 citations
Posted Content•
TL;DR: This article examined the hypothesis that the superior return to so-called value stocks is the result of expectational errors made by investors and found that a significant portion of the return difference between value and glamour stocks is attributable to earnings surprises that are systematically more positive for value stocks.
Abstract: This paper examines the hypothesis that the superior return to so-called value stocks is the result of expectational errors made by investors. We study stock price reactions around earnings announcements for value and glamour stocks over a 5 year period after portfolio formation. The announcement returns suggest that a significant portion of the return difference between value and glamour stocks is attributable to earnings surprises that are systematically more positive for value stocks. The evidence is inconsistent with a risk-based explanation for the return differential.
182 citations
Posted Content•
TL;DR: In the United States, the two principal modes of producing local government services are inhouse provision by government employees and contracting out to private suppliers, also known as privatization as discussed by the authors, and the evidence indicates that state clean government laws and state laws restricting county spending encourage privatization, whereas strong public unions discourage it.
Abstract: In the United States, the two principal modes of producing local government services are inhouse provision by government employees and contracting out to private suppliers, also known as privatization. We examine empirically how United States counties choose their mode of providing services. The evidence indicates that state clean- government laws and state laws restricting county spending encourage privatization, whereas strong public unions discourage it. The evidence is inconsistent with the view that efficiency considerations alone govern the provision mode, and points to the important roles played by political patronage and taxpayer resistance to government spending in the privatization decision.
52 citations
Posted Content•
TL;DR: The importance of legal protection of investors and ownership concentration in corporate governance systems around the world has been surveyed in this paper, with special attention paid to the importance of ownership concentration for financial institutions.
Abstract: This paper surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world. (This abstract was borrowed from another version of this item.)
47 citations
Posted Content•
TL;DR: In the United States, the two principal modes of producing local government services are inhouse provision by government employees and contracting out to private suppliers, also known as privatization as discussed by the authors, and the evidence indicates that state clean government laws and state laws restricting county spending encourage privatization, whereas strong public unions discourage it.
Abstract: In the United States, the two principal modes of producing local government services are inhouse provision by government employees and contracting out to private suppliers, also known as privatization. We examine empirically how United States counties choose their mode of providing services. The evidence indicates that state clean- government laws and state laws restricting county spending encourage privatization, whereas strong public unions discourage it. The evidence is inconsistent with the view that efficiency considerations alone govern the provision mode, and points to the important roles played by political patronage and taxpayer resistance to government spending in the privatization decision.
14 citations
Posted Content•
TL;DR: In this paper, a survey of 452 Russian shops, most of which were privatized between 1992 and 1993, is used to measure the importance of alternative channels through which privatization promotes restructuring.
Abstract: We use a survey of 452 Russian shops, most of which were privatized between 1992 and 1993, to measure the importance of alternative channels through which privatization promotes restructuring. Restructuring is measured as major renovation, a change in suppliers, an increase in hours stores stay open, and layoffs. There is strong evidence that the presence of new owners and new managers raises the likelihood of restructuring. In contrast, there is no evidence that equity incentives of old managers promote restructuring. The evidence points to the critical role new human capital plays in economic transformation.
9 citations